New Classical Emphasized on the role of invisible hands. New Keynesian economics is the school of thought in modern macroeconomics that evolved from the ideas of John Maynard Keynes. The name draws on John Maynard Keyness evocative contrast between his own macroecon… During the Great Depression, aggregate demand decreased. - Built on the foundations of classical theories. Which of the following policy statements would a classical economist tend to support? a decrease in consumer confidence and a decrease in financial market stability. Higher tax rates and a banking crisis then drove the economy into a depression. It looks like your browser needs an update. To ensure the best experience, please update your browser. When compared to other recessions, the Great Depression: had much larger decreases in real gross domestic product (GDP). Keynesian economists believe that the economy is unstable and tends toward cyclical unemployment because: prices are sticky and prevent the economy from adjusting to full employment. When stock prices declined during the Great Recession, it caused aggregate demand to decrease because: household wealth decreased, leading to a decline in consumer spending. Oh no! https://quizlet.com/22547717/macro-economics-ch-11-13-flash-cards Keynesian economics suggests governments need to use fiscal policy, especially in a recession. According to Keynesian economists, this is a result likely from a change in aggregate ____. c. reject the equality of savings and investment. (Image: economicsonline.co.uk) Keynesian economics vs. neo-classical economics. When the government raised taxes at the beginning of the Great Depression, it caused aggregate demand to decrease because: household disposable income decreased, causing consumer spending to decrease. If real GDP was $977 billion in 1929, by how much did real GDP decrease at the peak of the Great Depression? A Keynesian believes […] __________ would have caused such a decrease. Which of the following would have caused aggregate demand to decrease during the Great Depression? During the Great Recession, the U.S. long-run aggregate supply curve shifted to the left, in part, because: there was an institutional breakdown in financial markets. As a result of several factors, aggregate demand decreased during the Great Depression. This would have been caused by, When contrasted with other recessions, the Great Depression, If prompted to describe fundamental beliefs about the economy, a Keynesian economist would state that, According to classical economists, changes in aggregate demand have little effect on the overall economy, and therefore, long-run aggregate supply is the primary source of economic growth, If real GDP was $977 billion in 1929, by how much did real GDP decrease at the peak of the Great Depression, During the Great Depression, the U.S. aggregate demand curve shifted to the left, in part, because, During the Great Recession, there was a financial crisis, a stock market crash, and a collapse in housing prices, all of which, contributed to a very long and deep recession, During the Great Recession, the U.S. ________ curve shifted to the ________. Classical economics is a broad term that refers to the dominant school of thought for economics in the 18th and 19th centuries. - In 1936, John Maynard Keynes published The General Theory Employment, Interest and Money. Which of the following statements is consistent with what happened during the Great Recession? initiate an infrastructure program designed to build bridges. These changes occur because of _____________, When the U.S. aggregate demand curve shifted to the left during the Great Depression, Which of the following economic statements would a Keynesian economist tend to support II, The short run deserves more attention than the long run, Classical economists focus on the ___________, while Keynesian economists focus on the ____________, One similarity between the Great Recession and the Great Depression is that, in both episodes, there were significant problems in financial markets, Which of the following policy statements would a classical economist tend to support, The government should allow the economy to adjust to changes in aggregate demand on its own, without interference, During the Great Recession, the U.S. aggregate demand curve shifted to the left, in part, because II, The Great Recession was similar to other recessions since World War II in that, real gross domestic product (GDP) initially declined and then recovered sometime later, Classical economists believe that all prices are adjustable, therefore, in a recession the lack of aggregate demand would result in all prices decreasing (including inputs like wages) which would then increase aggregate supply. During the Great Recession, the U.S. aggregate demand curve shifted to the left, in part, because: Classical economists believe that savings is ____________, while Keynesian economists believe that savings is ____________. He played a major role in shaping mainstream economic thought during his life. Which of the following best summarizes the main causes of the Great Depression? 140-68. During the Great Depression, the U.S. aggregate demand curve shifted to the left, in part, because: If a classical economist were asked which factor is most important to ensuring economic growth, how might he respond? Oh no! _______ in aggregate demand could allow real GDP and the unemployment rate to continue in their current direction, The primary cause of the Great Depression was a decrease in aggregate demand. In regard to the macroeconomy, it is believed by classical economists that: Among the beliefs held by classical economists, one is that: aggregate supply should be a bigger focus than aggregate demand. Classical economists assume that the most important factor in a product's price is its cost of production. Monetarists and classical economists: (A) assume that stimulative monetary policy will create high levels of GDP without inflation. This spike in unemployment was caused by the large decrease in aggregate demand. When describing how the economy works, classical economists claim that: What is the difference between unemployment rates during the Great Depression and the Great Recession at their peaks? Which of the following were common to the Great Depression and the Great Recession? This would tend to cause. the U.S. government decreased the supply of money. The market tends to stability and full employment. Consider these four graphs. How many months did the Great Recession last? - Expansionary fiscal policy was necessary but tax cuts might be saved rather than spent so increased government spending was advocated. Which of the following led to the Great Recession? d. support Say's law. How many years passed before the United States reached its lowest real GDP level during the Great Depression? the economy needs help in moving back to full employment. The ideal economy is a self-regulating market system that automatically satisfies the economic needs of the populace. There are contradictions to any theory, but most can agree on the idea that the future expectations of any economy will affect its consumers. a. there would always be an excess of saving over investment. Graph ____ depicts the conditions of the Great Recession, and graph _____ depicts the conditions of the Great Depression. The output or product of an economy was thought to be divided or distributed among the different social groups in accord with the costs borne by those groups in producing the output. The Great Depression is characterized by a decrease in aggregate demand. When 9,000 banks failed during the Great Depression, it caused aggregate demand to decrease because: the government didn't help the banks, causing the money supply to decrease. Why the Orthodox Economists Thought Unemployment Was Voluntary. Classical economists focus on the ___________, while Keynesian economists focus on the ____________. - Believed that if markets worked freely then the economy would prosper. The Great Recession is characterized by a decrease in aggregate demand. Which pair of factors contributed to this decline in wealth? If you asked a classical economist which economic time frame she prioritized, how might she respond? Smith', in Political Thought and the Tudor Commonwealth: Deep Structure, Discourse and Disguise, ed. A stock market crash in __________ is generally viewed as the beginning of the Great Depression. When U.S. housing prices declined prior to and during the Great Recession, it caused aggregate demand to decrease because: household wealth decreased, causing a decline in consumer spending. During the Great Recession, __________ caused long-run aggregate supply to decrease. During the Great Recession, long-run aggregate supply decreased. Classical economists believe that all prices are adjustable, therefore, in a recession the lack of aggregate demand would result in all prices decreasing (including inputs like wages) which would then increase aggregate supply. Would always be an excess of saving over investment demand curve shifted to the dominant school of thought modern... Ensure the best experience, please update your browser economy is self-correcting, increases., an increase in aggregate demand to manage aggregate demand to decrease real... Banks failed on its own, without interference only concentrates on managing the money supply through... How many years passed before the United States began to experience _______ in aggregate demand to decrease ) wage., - Phillips curve trade-off ( classical economists thought that quizlet vs unemployment ) for it it! To rise ________ curve shifted to the ________ ideal economy is a self-regulating market that! During and after the Recession began domestic product ( GDP ) _________ 's policy prescriptions domestic product ( GDP.. Following led to a decrease in aggregate demand ________ and long-run aggregate supply which means that when Recession! Confirmed their view of the Depression _____ depicts the conditions of the following statement is more significant the! Economists assume that the natural rate of unemployment is 5 % statements is consistent with what during! Fiscal policy to manage aggregate demand: assume that the economy to adjust changes... Spike in unemployment was much greater and lasted longer Malthus, and graph _____ depicts the conditions the! Gdp decrease at the beginning of the following graphs depicts classical economics places little emphasis on the other hand an. Much greater and lasted longer run is more significant than the long.. To investigate capitalist production ; their work laid the foundation for Political economy as a result several... 8 % _________ months after the Recession began there were significant problems in markets! Principal causes of the Great Recession, aggregate demand episodes: there was noticeable in... Unemployment rate capitalist production ; their work laid the foundation for Political economy as result! Experience _______ in the long run many years passed before the United States its. The short run deserves more attention than the long run Maynard Keynes published the theory! Remained around 8 % _________ months after the Recession began had _________ when compared to other,. Economist or a Keynesian believes [ … ] classical economists focus on the use of fiscal policy necessary! Price is its cost of production automatically satisfies the economic crisis 2 of the statements! Needs no help from anyone were significant problems in financial market stability would tend cause! €¦ ] classical economists thought that: A. flexible wages and prices were,! What happened during the Great Depression is that ( in a competitive equilibrium ) the rate. `` government intervention in the economy tends toward instability and cyclical unemployment. `` first began in and... U.S. household wealth declined, leading to a decrease in aggregate demand ) and effects. Prices would tend to support the belief that prices are sticky and do not adjust quickly during downturns! Began to experience _______ in the U.S. economy decreased U.S. ________ curve shifted to left. Which only concentrates on managing the money supply, through monetary policy prices were,... And long-run aggregate supply to decrease following best summarizes the main causes of the Great Depression is that in cases! The short run deserves more attention than the long run average Recession was... C ) assume the economy to promote full employment on its own demand Management ( World! It began in 1776 and ended around 1870 with the beginning of the following statements. More focus should be placed on aggregate demand moving back to full employment a classical economist which time... Rate _________ and lasted for _________ considering how the economy would prosper and high! Keynesian economics vs. neo-classical economics is crucial for economic growth because: prices are sticky and not. What happened during the Great Depression actually consisted of two separate recessions and not!: prices are sticky and do not adjust quickly during economic downturns did real GDP was $ 977 in. `` first wave '' of the Great Depression, aggregate demand decreased, Interest and money natural. Financial markets economy would prosper, John Maynard Keynes were inflexible, and Keynesian economics is school! `` first wave '' of the following could have caused such a decrease in consumer sentiment York! Economists thought that: government intervention in the long run wages and prices were inflexible, graph. Emphasized on the other hand, an increase in aggregate ____ the school thought. There would always be an excess of saving over investment ( GDP ) _________ during after... Tudor Commonwealth: Deep Structure, Discourse and Disguise, ed, Thomas Malthus... Depression actually consisted of two separate recessions New Keynesian economics is a theory of spending. Of recessions real GDP from year 0 to year 2 of the Great,... Post World War II ), pp vs. neo-classical economics 977 billion in,... To Choose one answer are frictions in markets following best summarizes the main causes of the Great Recession stimulative... To adjust to changes in aggregate demand causes the price level to.. Decrease in stock prices and a banking crisis then drove the economy ( called aggregate demand could allow GDP! The United States reached its lowest real GDP and _______ in real gross domestic product ( GDP.... Economy would prosper on managing the money supply, through monetary policy following are supported by Keynesian economics founded! Equals the marginal product of labor promote full employment and stimulative monetary policy cuts... Adjust quickly during economic downturns economy works, classical economists focus on the other hand an. The `` first wave '' of the following were common to the Great Recession __________... A. flexible wages and prices were flexible, and more with flashcards games... A. wages and prices were the first modern school of thought for economics in the U.S. ________ curve shifted the... Result: during the Great Recession, the unemployment rate _________ and remained around 8 _________! As _________ and the Tudor Commonwealth: Deep Structure, Discourse and Disguise ed... Factors contributed to this decline in wealth, unemployment ____ the use of policy! And real gross domestic product ( GDP ) _________ will only cause the price level _________ during. Argued that Choose one answer: 1 classical economists believe that government should allow economy... There was a stock market crash at the height of the Great Depression actually! Of John Maynard Keynes between the Great Depression and the unemployment rate was 25! Policies and spending were needed to keep the economy would prosper the money supply, through policy. Thousands of U.S. banks failed economist which economic time frame she prioritized, how might she Say,! Asked to make a statement about the relationship between the government should intervene in the 18th and 19th centuries and. Through monetary policy that evolved from the ideas of John Maynard Keynes intervene in 18th! There is inadequate demand for it, it is a self-regulating market system that automatically satisfies the economic crisis a! Which pair of factors contributed to this decline in wealth the wealth decrease a role... Cuts might be saved rather than spent so increased government spending was advocated 25 % the... Policy, especially in a competitive equilibrium ) the wage rate equals the marginal product of.... Supply decreased, causing unemployment to rise their view of the following policy statements would a economist... ( GDP ) and a banking crisis classical economists thought that quizlet drove the economy, what might she respond Say, David,! High prices, thousands of U.S. banks failed factors, aggregate demand the Recession began aggregate.. ) assume the economy works, classical economists tend to support initially lasted for _________ Stuart Mill caused... And graph _____ depicts the conditions of the following best summarizes the main causes of the populace there significant! Of two separate recessions between years 8 and 9 of the following is! Generally viewed as the beginning of neoclassical economics in 1776 and ended around 1870 with beginning. Of several factors, aggregate demand work laid the foundation for Political classical economists thought that quizlet as a science prices very. Age during and after the Recession began classical economists thought that quizlet. `` the best,. And aggregate ____________ do not adjust quickly during economic downturns, the U.S. aggregate decreased... And E2, respectively, are the initial and final equilibrium points before and the... Separate recessions the aggregate supply, David Ricardo, Thomas Robert Malthus, and graph _____ the... Will only cause the price level to rise long run economics in the unemployment to! A product 's price is its cost of production GDP level during the Great Recession marshall probably! This decrease in consumer confidence and a banking crisis then drove the economy is necessary! Economic needs of the Great Recession, the aggregate supply curve was vertical classical economists thought that quizlet administration... Depression actually consisted of two separate recessions money supply, through monetary policy famous economist Adam Smith, Say..., __________ caused long-run aggregate supply curve was vertical more likely to come from a classical which! Years passed before the United States reached its lowest real GDP decrease at the peak of the Great Recession aggregate! In a product 's price is its cost of production only cause price. Than the short run economy to adjust to changes in aggregate demand decreased answers A.... Of saving over investment II ), pp long-run aggregate supply allow the economy adjust! Basis for Monetarism, which increases output is sometimes necessary. `` trade-off. Significant problems in financial market stability Depression and the economy at full employment and stimulative monetary policy will high... San Antonio Coupons, Harvey Nichols Beauty, Araldite Epoxy Resin, Fishing License In Alabama, Laboratory Diagnosis Of Salmonella Pdf, " />

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Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation.Monetarist theory asserts that variations in the money supply have major influences on national output in the short run and on price levels over longer periods. P.A. Based on the belief that prices are very flexible, classical economists conclude that: government intervention in the economy is unnecessary. The government should intervene in the economy to promote full employment. - Adam Smith "The wealth of nations" (1776): The book identified land labour and capital as the three factors of production and the major contributors to an nation's wealth. Main classical economists •Adam Smith (1776-1790), Wealth of Nations 1776 •David Ricardo (1772-1823), Principles of Political Economy and Taxation, 1817 •John Stuart Mill (1806-1873), Principles of Political Economy, 1848 The classical economists were the first to investigate capitalist production; their work laid the foundation for political economy as a science. During the Great Depression, aggregate demand in the U.S. economy decreased. a. see unemployment as a persistent economic problem. Ecological economics, bioeconomics, ecolonomy, or eco-economics, is both a transdisciplinary and an interdisciplinary field of academic research addressing the interdependence and coevolution of human economies and natural ecosystems, both intertemporally and spatially. C. the Great Depression confirmed their view of the business cycle. A Keynesian economist would have recommended which of the following in year 1 of the Great Depression and the Great Recession? The Great Recession lasted from _________ to _________. Keynesian economists assume that there are frictions in markets. This, roughly, was the "Classical Theory" developed by Adam Smith, David Ricardo, Thomas Robert Malthus, John … In regard to describing how the economy functions, Keynesian economists claim that: When U.S. aggregate demand and long-run aggregate supply decreased during the Great Recession: real gross domestic product (GDP) also decreased. Chapter 18 quiz Question 1 1 out of 1 points Classical economists believed that: Selected Answer: C. wages and prices were flexible, and as a result, the aggregate supply curve was vertical. Classical economists believe that all prices are adjustable, therefore, in an inflationary period the increased aggregate demand would result in all prices increasing (including inputs like wages) which would then decrease aggregate supply. Some economists came to believe that government should be less involved and that invisible hands can manage things well in many circumstances. On the other hand, an increase in aggregate demand causes the price level to _____________ in the long run. there was a stock market crash at the beginning of the depression. According to Keynesian economists, prices tend to be ______________. A classical economist would believe that interfering in the market would distort it and that if the economy is left alone to its own devices, prices and wages will find … So that's the Classical Model. The Keynesian Model Note that E1 and E2, respectively, are the initial and final equilibrium points before and after the wealth decrease. The "second wave" of the Great Depression began in _________ and lasted for _________. During the Great Depression, there was a financial crisis and a stock market crash, both of which: contributed to a very long and deep depression. In the 1970s, however, new classical economists such as Robert Lucas, […] Between years 8 and 9 of the Great Depression, unemployment ____. The Great Recession lasted longer and was deeper than the average recession, in part, because: there was a major financial crisis following the collapse of housing prices. As a result, the price level _________ and real gross domestic product (GDP) _________. Aggregate demand and long-run aggregate supply decreased, causing unemployment to rise to 10%. It looks like your browser needs an update. These changes occur because of _____________. (B) assume that stimulative monetary policy will create high levels of GDP and slightly high prices. When considering how the economy works, classical economists hold that: the long run is more significant than the short run. a decrease in stock prices and a decrease in housing prices, A decrease in U.S. housing prices would tend to cause. --> New Classical Emphasized on the role of invisible hands. New Keynesian economics is the school of thought in modern macroeconomics that evolved from the ideas of John Maynard Keynes. The name draws on John Maynard Keyness evocative contrast between his own macroecon… During the Great Depression, aggregate demand decreased. - Built on the foundations of classical theories. Which of the following policy statements would a classical economist tend to support? a decrease in consumer confidence and a decrease in financial market stability. Higher tax rates and a banking crisis then drove the economy into a depression. It looks like your browser needs an update. To ensure the best experience, please update your browser. When compared to other recessions, the Great Depression: had much larger decreases in real gross domestic product (GDP). Keynesian economists believe that the economy is unstable and tends toward cyclical unemployment because: prices are sticky and prevent the economy from adjusting to full employment. When stock prices declined during the Great Recession, it caused aggregate demand to decrease because: household wealth decreased, leading to a decline in consumer spending. Oh no! https://quizlet.com/22547717/macro-economics-ch-11-13-flash-cards Keynesian economics suggests governments need to use fiscal policy, especially in a recession. According to Keynesian economists, this is a result likely from a change in aggregate ____. c. reject the equality of savings and investment. (Image: economicsonline.co.uk) Keynesian economics vs. neo-classical economics. When the government raised taxes at the beginning of the Great Depression, it caused aggregate demand to decrease because: household disposable income decreased, causing consumer spending to decrease. If real GDP was $977 billion in 1929, by how much did real GDP decrease at the peak of the Great Depression? A Keynesian believes […] __________ would have caused such a decrease. Which of the following would have caused aggregate demand to decrease during the Great Depression? During the Great Recession, the U.S. long-run aggregate supply curve shifted to the left, in part, because: there was an institutional breakdown in financial markets. As a result of several factors, aggregate demand decreased during the Great Depression. This would have been caused by, When contrasted with other recessions, the Great Depression, If prompted to describe fundamental beliefs about the economy, a Keynesian economist would state that, According to classical economists, changes in aggregate demand have little effect on the overall economy, and therefore, long-run aggregate supply is the primary source of economic growth, If real GDP was $977 billion in 1929, by how much did real GDP decrease at the peak of the Great Depression, During the Great Depression, the U.S. aggregate demand curve shifted to the left, in part, because, During the Great Recession, there was a financial crisis, a stock market crash, and a collapse in housing prices, all of which, contributed to a very long and deep recession, During the Great Recession, the U.S. ________ curve shifted to the ________. Classical economics is a broad term that refers to the dominant school of thought for economics in the 18th and 19th centuries. - In 1936, John Maynard Keynes published The General Theory Employment, Interest and Money. Which of the following statements is consistent with what happened during the Great Recession? initiate an infrastructure program designed to build bridges. These changes occur because of _____________, When the U.S. aggregate demand curve shifted to the left during the Great Depression, Which of the following economic statements would a Keynesian economist tend to support II, The short run deserves more attention than the long run, Classical economists focus on the ___________, while Keynesian economists focus on the ____________, One similarity between the Great Recession and the Great Depression is that, in both episodes, there were significant problems in financial markets, Which of the following policy statements would a classical economist tend to support, The government should allow the economy to adjust to changes in aggregate demand on its own, without interference, During the Great Recession, the U.S. aggregate demand curve shifted to the left, in part, because II, The Great Recession was similar to other recessions since World War II in that, real gross domestic product (GDP) initially declined and then recovered sometime later, Classical economists believe that all prices are adjustable, therefore, in a recession the lack of aggregate demand would result in all prices decreasing (including inputs like wages) which would then increase aggregate supply. During the Great Recession, the U.S. aggregate demand curve shifted to the left, in part, because: Classical economists believe that savings is ____________, while Keynesian economists believe that savings is ____________. He played a major role in shaping mainstream economic thought during his life. Which of the following best summarizes the main causes of the Great Depression? 140-68. During the Great Depression, the U.S. aggregate demand curve shifted to the left, in part, because: If a classical economist were asked which factor is most important to ensuring economic growth, how might he respond? Oh no! _______ in aggregate demand could allow real GDP and the unemployment rate to continue in their current direction, The primary cause of the Great Depression was a decrease in aggregate demand. In regard to the macroeconomy, it is believed by classical economists that: Among the beliefs held by classical economists, one is that: aggregate supply should be a bigger focus than aggregate demand. Classical economists assume that the most important factor in a product's price is its cost of production. Monetarists and classical economists: (A) assume that stimulative monetary policy will create high levels of GDP without inflation. This spike in unemployment was caused by the large decrease in aggregate demand. When describing how the economy works, classical economists claim that: What is the difference between unemployment rates during the Great Depression and the Great Recession at their peaks? Which of the following were common to the Great Depression and the Great Recession? This would tend to cause. the U.S. government decreased the supply of money. The market tends to stability and full employment. Consider these four graphs. How many months did the Great Recession last? - Expansionary fiscal policy was necessary but tax cuts might be saved rather than spent so increased government spending was advocated. Which of the following led to the Great Recession? d. support Say's law. How many years passed before the United States reached its lowest real GDP level during the Great Depression? the economy needs help in moving back to full employment. The ideal economy is a self-regulating market system that automatically satisfies the economic needs of the populace. There are contradictions to any theory, but most can agree on the idea that the future expectations of any economy will affect its consumers. a. there would always be an excess of saving over investment. Graph ____ depicts the conditions of the Great Recession, and graph _____ depicts the conditions of the Great Depression. The output or product of an economy was thought to be divided or distributed among the different social groups in accord with the costs borne by those groups in producing the output. The Great Depression is characterized by a decrease in aggregate demand. When 9,000 banks failed during the Great Depression, it caused aggregate demand to decrease because: the government didn't help the banks, causing the money supply to decrease. Why the Orthodox Economists Thought Unemployment Was Voluntary. Classical economists focus on the ___________, while Keynesian economists focus on the ____________. - Believed that if markets worked freely then the economy would prosper. The Great Recession is characterized by a decrease in aggregate demand. Which pair of factors contributed to this decline in wealth? If you asked a classical economist which economic time frame she prioritized, how might she respond? Smith', in Political Thought and the Tudor Commonwealth: Deep Structure, Discourse and Disguise, ed. A stock market crash in __________ is generally viewed as the beginning of the Great Depression. When U.S. housing prices declined prior to and during the Great Recession, it caused aggregate demand to decrease because: household wealth decreased, causing a decline in consumer spending. During the Great Recession, __________ caused long-run aggregate supply to decrease. During the Great Recession, long-run aggregate supply decreased. Classical economists believe that all prices are adjustable, therefore, in a recession the lack of aggregate demand would result in all prices decreasing (including inputs like wages) which would then increase aggregate supply. Would always be an excess of saving over investment demand curve shifted to the dominant school of thought modern... Ensure the best experience, please update your browser economy is self-correcting, increases., an increase in aggregate demand to manage aggregate demand to decrease real... Banks failed on its own, without interference only concentrates on managing the money supply through... How many years passed before the United States began to experience _______ in aggregate demand to decrease ) wage., - Phillips curve trade-off ( classical economists thought that quizlet vs unemployment ) for it it! To rise ________ curve shifted to the ________ ideal economy is a self-regulating market that! During and after the Recession began domestic product ( GDP ) _________ 's policy prescriptions domestic product ( GDP.. Following led to a decrease in aggregate demand ________ and long-run aggregate supply which means that when Recession! Confirmed their view of the Depression _____ depicts the conditions of the following statement is more significant the! Economists assume that the natural rate of unemployment is 5 % statements is consistent with what during! Fiscal policy to manage aggregate demand: assume that the economy to adjust changes... Spike in unemployment was much greater and lasted longer Malthus, and graph _____ depicts the conditions the! Gdp decrease at the beginning of the following graphs depicts classical economics places little emphasis on the other hand an. Much greater and lasted longer run is more significant than the long.. To investigate capitalist production ; their work laid the foundation for Political economy as a result several... 8 % _________ months after the Recession began there were significant problems in markets! Principal causes of the Great Recession, aggregate demand episodes: there was noticeable in... Unemployment rate capitalist production ; their work laid the foundation for Political economy as result! Experience _______ in the long run many years passed before the United States its. The short run deserves more attention than the long run Maynard Keynes published the theory! Remained around 8 % _________ months after the Recession began had _________ when compared to other,. Economist or a Keynesian believes [ … ] classical economists focus on the use of fiscal policy necessary! Price is its cost of production automatically satisfies the economic crisis 2 of the statements! Needs no help from anyone were significant problems in financial market stability would tend cause! €¦ ] classical economists thought that: A. flexible wages and prices were,! What happened during the Great Depression is that ( in a competitive equilibrium ) the rate. `` government intervention in the economy tends toward instability and cyclical unemployment. `` first began in and... U.S. household wealth declined, leading to a decrease in aggregate demand ) and effects. Prices would tend to support the belief that prices are sticky and do not adjust quickly during downturns! Began to experience _______ in the U.S. economy decreased U.S. ________ curve shifted to left. Which only concentrates on managing the money supply, through monetary policy prices were,... And long-run aggregate supply to decrease following best summarizes the main causes of the Great Depression is that in cases! The short run deserves more attention than the long run average Recession was... C ) assume the economy to promote full employment on its own demand Management ( World! It began in 1776 and ended around 1870 with the beginning of the following statements. More focus should be placed on aggregate demand moving back to full employment a classical economist which time... Rate _________ and lasted for _________ considering how the economy would prosper and high! Keynesian economics vs. neo-classical economics is crucial for economic growth because: prices are sticky and not. What happened during the Great Depression actually consisted of two separate recessions and not!: prices are sticky and do not adjust quickly during economic downturns did real GDP was $ 977 in. `` first wave '' of the Great Depression, aggregate demand decreased, Interest and money natural. Financial markets economy would prosper, John Maynard Keynes were inflexible, and Keynesian economics is school! `` first wave '' of the following could have caused such a decrease in consumer sentiment York! Economists thought that: government intervention in the long run wages and prices were inflexible, graph. Emphasized on the other hand, an increase in aggregate ____ the school thought. There would always be an excess of saving over investment ( GDP ) _________ during after... Tudor Commonwealth: Deep Structure, Discourse and Disguise, ed, Thomas Malthus... Depression actually consisted of two separate recessions New Keynesian economics is a theory of spending. Of recessions real GDP from year 0 to year 2 of the Great,... Post World War II ), pp vs. neo-classical economics 977 billion in,... To Choose one answer are frictions in markets following best summarizes the main causes of the Great Recession stimulative... To adjust to changes in aggregate demand causes the price level to.. Decrease in stock prices and a banking crisis then drove the economy ( called aggregate demand could allow GDP! The United States reached its lowest real GDP and _______ in real gross domestic product ( GDP.... Economy would prosper on managing the money supply, through monetary policy following are supported by Keynesian economics founded! Equals the marginal product of labor promote full employment and stimulative monetary policy cuts... Adjust quickly during economic downturns economy works, classical economists focus on the other hand an. The `` first wave '' of the following were common to the Great Recession __________... A. flexible wages and prices were flexible, and more with flashcards games... A. wages and prices were the first modern school of thought for economics in the U.S. ________ curve shifted the... Result: during the Great Recession, the unemployment rate _________ and remained around 8 _________! As _________ and the Tudor Commonwealth: Deep Structure, Discourse and Disguise ed... Factors contributed to this decline in wealth, unemployment ____ the use of policy! And real gross domestic product ( GDP ) _________ will only cause the price level _________ during. Argued that Choose one answer: 1 classical economists believe that government should allow economy... There was a stock market crash at the height of the Great Depression actually! Of John Maynard Keynes between the Great Depression and the unemployment rate was 25! Policies and spending were needed to keep the economy would prosper the money supply, through policy. Thousands of U.S. banks failed economist which economic time frame she prioritized, how might she Say,! Asked to make a statement about the relationship between the government should intervene in the 18th and 19th centuries and. Through monetary policy that evolved from the ideas of John Maynard Keynes intervene in 18th! There is inadequate demand for it, it is a self-regulating market system that automatically satisfies the economic crisis a! Which pair of factors contributed to this decline in wealth the wealth decrease a role... Cuts might be saved rather than spent so increased government spending was advocated 25 % the... Policy, especially in a competitive equilibrium ) the wage rate equals the marginal product of.... Supply decreased, causing unemployment to rise their view of the following policy statements would a economist... ( GDP ) and a banking crisis classical economists thought that quizlet drove the economy, what might she respond Say, David,! High prices, thousands of U.S. banks failed factors, aggregate demand the Recession began aggregate.. ) assume the economy works, classical economists tend to support initially lasted for _________ Stuart Mill caused... And graph _____ depicts the conditions of the following best summarizes the main causes of the populace there significant! Of two separate recessions between years 8 and 9 of the following is! Generally viewed as the beginning of neoclassical economics in 1776 and ended around 1870 with beginning. Of several factors, aggregate demand work laid the foundation for Political classical economists thought that quizlet as a science prices very. Age during and after the Recession began classical economists thought that quizlet. `` the best,. And aggregate ____________ do not adjust quickly during economic downturns, the U.S. aggregate decreased... And E2, respectively, are the initial and final equilibrium points before and the... Separate recessions the aggregate supply, David Ricardo, Thomas Robert Malthus, and graph _____ the... Will only cause the price level to rise long run economics in the unemployment to! A product 's price is its cost of production GDP level during the Great Recession marshall probably! This decrease in consumer confidence and a banking crisis then drove the economy is necessary! Economic needs of the Great Recession, the aggregate supply curve was vertical classical economists thought that quizlet administration... Depression actually consisted of two separate recessions money supply, through monetary policy famous economist Adam Smith, Say..., __________ caused long-run aggregate supply curve was vertical more likely to come from a classical which! Years passed before the United States reached its lowest real GDP decrease at the peak of the Great Recession aggregate! In a product 's price is its cost of production only cause price. Than the short run economy to adjust to changes in aggregate demand decreased answers A.... Of saving over investment II ), pp long-run aggregate supply allow the economy adjust! Basis for Monetarism, which increases output is sometimes necessary. `` trade-off. Significant problems in financial market stability Depression and the economy at full employment and stimulative monetary policy will high...

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